Interesting article in the Bangkok Post on the mounting political problems in Southeast Asia.

Due to a mixture of misfortune and mortality, Southeast Asia is now as volatile as it was when the Asian Financial Crisis struck in 1997, as we witness a series of unconnected leadership crises across the region. These crises exacerbate more fundamental problems: entrenched vested interests, rampant corruption, and poorly integrated plural societies. Add to this growing ethnic and religious tensions and the threat of violent extremism and it makes for a combustible brew.

It’s important to note that US dollar liabilities and externally fragile funding conditions are only part of the reason John & I expect to see waves of capital flight from a number of emerging markets in the coming quarters. Political dysfunction (like that described in this article) and idiosyncratic business/social risks (like the scandals in Brazil and Malaysia today or like Mexico’s Zapatista rebellion in 1994) have historically played MAJOR roles in FX crises by eroding confidence and adding to foreign investors’ collective rationale for capital flight. – Worth Wray